After the publication of the ANTA Sports Report, UBS issued a rating report and said, "continue to give Anta 'buy' a rating with a target price of HK$9."
On February 25, Anta Sports announced the 2012 annual financial report. During the reporting period, the companyâ€™s operating income was 7.62 billion yuan, a year-on-year decrease of 14.4%; profit attributable to shareholders was 1.36 billion yuan, a year-on-year decrease of 21.5%; free cash flow was 16.1 Billion yuan, an increase of 32% over 2012, and the dividend payout ratio reached a record high of 71.7%.
After the publication of the ANTA Sports Report, UBS issued a rating report and said, "continue to give Anta 'buy' a rating with a target price of HK$9." The UBS report pointed out that Anta's net cash amounted to RMB 5 billion, which has the potential to distribute special dividends in 2013 and 2014. Although turnover and profit fell by 14.4% and 21.5% respectively in 2012, Anta announced that it would pay a special dividend of 8 cents in Hong Kong. The total dividend for the year was a total of 48 cents in Hong Kong, with a dividend payout ratio of 71.7% and a dividend yield of 6.5%.
The UBS report also estimated that with stronger net cash, it is believed that Anta will have greater ability to pay special dividends in 2013 and 2014. Free cash inflows also rose by 32% year-on-year to RMB 1.61 billion, reflecting Anta's ability to maintain a good cash flow despite the weak market conditions.
In an interview with this reporter, Ding Shizhong, chairman and CEO of ANTA Sports, said: â€œIn 2013, the industry is still full of challenges and companies need to be cautious. The Chinese market still has a lot of space and urbanization is accelerating towards consumer goods, especially sporting goods. Growth helps."
When talking about the development of Anta Sports in 2013, Ding Shizhong told reporters: â€œFor Anta, the most important thing is the degree of health, not the scale, and it will not blindly pursue the numbers. In the past, the development of the Chinese sporting goods industry has been absolute. The number is growing rapidly, but in the fierce competition environment, many brands are stalled, and more powerful companies are needed to occupy the market."
UBS believes that Antaâ€™s momentum continues to improve and same-store sales will improve in the second half of 2013. In the third quarter of 2013, orders fell by 10% to 20%, showing an improvement over the previous two quarters. UBS expects ANTA's same-store sales to achieve positive growth in the second half of 2013. Anta management also pointed out that the same-store sales and inventory levels in the first quarter of 2013 will be slightly better than at the end of 2012.
In addition to UBSâ€™s â€œbuyâ€ rating on Anta, Lyon also released the latest rating report, giving an â€œoutperformâ€ rating. The report shows that although ANTA's net profit fell by 21% in 2012, it is in line with Lyon and market expectations. However, ANTAâ€™s strong operating cash inflow and free cash inflow growth reflect its good profitability and is superior to other sporting goods industry peers. Therefore, Anta is Lyon's preferred company in China's sporting goods industry, reaffirming the "outperform" rating, and the latest target price is 8.64 Hong Kong dollars.
Lyon expects that ANTAâ€™s decline in January-February 2013 will narrow slightly, and it is expected that same-store sales for 2013 will improve over 2012 as a whole.
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